Australian Dollar Seesaws Amid Fluctuating Risk Appetite

Australian Dollar (AUD) Flip Flops in Mixed Trade

The Australian Dollar (AUD) opened yesterday’s session on the back foot as Westpac’s consumer confidence index slumped to a seven-year low.

AUD exchange rates then rallied through the first half of the European session amid improving risk appetite, before wobbling again at the start of the US session as market sentiment soured again.

Looking ahead, in the absence of any notable AUD data releases the direction of the Australian Dollar is likely to continue to be dictated by market risk dynamics.

New Zealand Dollar (NZD) Fluctuates amid Uneven Market Sentiment

The New Zealand Dollar (NZD) also traded in a wide range on Wednesday as the fluctuating investors risk appetite infused volatility into the antipodean currency.

A similar trend may emerge today as a lack of data leaves the ‘Kiwi’ beholden to market sentiment.

Pound (GBP) Gains Tempered by Brexit Concerns

The Pound (GBP) ticked higher yesterday, with the currency finding support amid the upbeat market mood.

However, these gains were capped in the face of fresh Brexit uncertainty, after a spokesperson for UK Prime Minister Boris Johnson said that Northern Ireland Protocol talks are in a ‘serious situation’.

The release of the UK’s latest GDP figures could leave the Pound on the back foot today. Economists forecast the UK’s economic growth will have slowed in the first quarter of 2022.

Euro (EUR) Weakens Despite ECB Rate Hike Hints

The Euro (EUR) trended broadly lower on Wednesday, despite the European Central Bank’s (ECB) strongest hints yet that it might raise interest rates in July.

Speaking yesterday ECB President Christine Lagarde said that the bank’s asset purchase programme will end early in the third quarter and that a rate hike could come ‘a few weeks’ later.

With EUR data thin on the ground today, the Euro may become more sensitive to events in Ukraine, potentially leading to additional losses as the war continues to drag on.

US Dollar (USD) Softens amid Risk-Off Flows

The US Dollar (USD) fell back during yesterday’s session as demand for the safe-haven currency was undermined by risk-on flows.

The ‘Greenback’ briefly spiked after the latest US CPI figures printed above expectations. However, the USD selloff quickly resumed as April’s figures were seen as marking the beginning of a sustained decline in inflation.

Will this pullback in the US Dollar persist today as economist forecasts April’s US PPI figures will report a similar deacceleration of producer prices.

Canadian Dollar (CAD) Buoyed by Rising Oil Prices

The Canadian Dollar (CAD) strengthened on Wednesday, with the commodity-linked currency being underpinned by a goodish uptick in oil prices.

Expect to see the ‘Loonie’ extend these gains through today’s session so long as the uptrend in oil prices remains in place.

Data Releases

May 12th 16:00 GBP GDP (Q1) 1%
May 12th 16:00 GBP GDP (Mar) 0%
May 12th 22:30 USD PPI (Apr) 0.5%
May 12th 22:30 USD Initial Jobless Claims (7/May) 195,000

 

 

 

 

 

Mathew Andrews

mathew.andrews@torfx.com


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